Economic Quarterly Report - garmentdistrict.nyc

Economic Quarterly Report 1st Quarter 2021

2 | Economic Quarterly Report

PEDESTRIANSPEDESTRIANSPEDESTRIAN COUNTSWELCOMING BACK THE GARMENT DISTRICT

We are resuming our quarterly Economic Reports this year after a pause in 2020. Leasing of both office and retail spaces slowed dramatically as the COVID-19 crisis unfolded, and accurate tracking of leasing activity was impacted as in-person communication and office working were disrupted. Even today, as the city and the Garment District are slowly emerging from the devastating effects of the last year, the impact of the pandemic on economic activity in the neighborhood is not entirely clear. Availability and vacancy rates are at highs not seen in at least a decade, and the average months on market for available spaces has nearly doubled.

In just over one week in March 2020, when local restrictions were first implemented, neighborhood pedestrian counts dropped 70 percent, eventually falling by 90 percent. Storefronts and offices shuttered, and travel into the District’s public transit hubs fell by well over 90 percent. Activity began gradually rebounding in early May, but pedestrian counts and other measures, while improving steadily, remain far below normal.

Tourism and business travel were also decimated by COVID-19 as New York City missed out on most of its typical 50 million domestic and 13.5 million foreign tourists. This was particularly impactful in the Garment District, where 48 hotels and 11,000 rooms account for more than eight percent of the entire hotel capacity in New York City. The neighborhood was one of the best performing hotel markets in the city in recent years, and the rise of the restaurant and bar scene in the District has largely coincided with the hotel construction boom that has seen 33 hotels constructed in the past ten years.

As vaccinations continue to roll out at a rapid rate and local restrictions are eased, there is reason to hope for a boom time ahead for the city and the Garment District. Each week has brought more pedestrians to the neighborhood and higher transit ridership. There is optimism for a wave of pent-up demand for social experiences to re-enliven our streets. The Garment District Alliance is prepared for it, continuing to advocate for policies from the city and state to ensure a robut recovery, while invigorating our streets with vibrant public spaces and public art to welcome workers and visitors back to the neighborhood.

1st Quarter 2021 | 3

EMPLOYMENT

» Employment in zip code 10018 continued its multi-decade growth trend in 2019. The impact of COVID-19 on neighborhood employment is not yet known. 2020 employment figures are anticipated to be released by NewYork State in late 2021.

» The largest growth sectors from 2018 to 2019 in the neighborhood’s core industries were Education and Health Services (+17.6%) and Natural Resources, Mining and Construction (+8.1%).

» Hotels, restaurants, and bars continued to drive significant growth in the leisure and hospitality sector,

but 2020 job losses are expected to be severe given the impact of the pandemic.

» The largest employment sector in the neighborhood remains Professional and Business Services, which grew 5.3% in 2019 and contains nearly 38% of all jobs in the neighborhood.

» Overall manufacturing continued a long decline, falling to just over 5,000 jobs. Of those, 3,800 are in apparel manufacturing, which fell 12% from 2008 and 74% from 2000. Apparel manufacturing comprised just 2.6% of employment in the District in 2019.

KEY INSIGHTS

EMPLOYEES IN CORE GDA INDUSTRIES — ZIP CODE 10018, 2000 - 2019

2,157

17,079

26,691

-

6,362

18,224

5,439

2,209

1,587

89,267

Natural Resources, Mining and Construction

Manufacturing

Trade, Transportation, and Utilities

Information

Financial Services

Professional and Business Services

Education and Health Services

Leisure and Hospitality

Other Services

Total Employment

2000

6,143

5,078

25,200

9,796

11,893

52,915

10,749

11,629

7,411

141,091

2019

5,683

5,700

26,869

10,535

12,203

50,238

9,137

11,136

7,374

138,875

2018

8.1%

-10.9%

-6.2%

-7.0%

-2.5%

5.3%

17.6%

4.4%

0.5%

1.6%

1-yr. Change

184.8%

-70.3%

-5.6%

-

86.9%

190.3%

97.6%

426.4%

367.0%

58.1%

Since 2000

Source: NY State Dept. of Labor


OFFICE

KEY INSIGHTS

» While leasing data tracked by CoStar and CompStak has yet to reflect a drop in Garment District average starting rents due to the pandemic, this may be a lagging indicator given that vacancy and availability rates have spiked dramatically and asking rents have declined.

» With leasing activity down significantly, the data is more easily impacted by outliers. For instance, the rise in average starting rents in the Grand Central Partnership was driven in large part by the opening of One Vanderbilt.

» Recent notable office leases in the Garment District include:

» Transit Wireless 32,499 SF - 1400 Broadway

» Ideanomics 10,790 SF - 1441 Broadway

» Beth Melsky Casting 10,000 SF - 49 W 37th St

» The Forum Group 8,216 SF - 550 Seventh Ave

» Arete Management 6,966 SF - 42 W 39th St

GARMENT DISTRICT AVERAGE STARTING OFFICE RENTS PER SF

Source: CompStak, Inc., 1-year moving averages

OFFICE

$51.92 $52.16 $52.35 $52.48 $52.57 $52.66 $52.74 $52.83 $52.91 $52.98 $53.07

$53.38 $53.86

$40

$42

$44

$46

$48

$50

$52

$54

Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21


2 A

VE

.

3 A

VE

.

F D

R D

RIV

E

VE

.

VE

.

MA

DIS

ON

AV

E.

W. 44 ST.

W. 52 ST.

W. 48 ST.

BR

OA

DW

AY

W. 30 ST.

LE

XIN

GT

ON

AV

E.

5 A

VE

.

E. 52 ST.

E. 46 ST.

E. 30 ST.

E. 34 ST.

W. 40 ST.

W. 50 ST.

E. 32 ST.

E. 48 ST.

W. 54 ST. E. 54 ST.

E. 40 ST.

VE

.

E. 42 ST.

VE

.

E. 50 ST.

W. 34 ST.

W. 42 ST.

W. 46 ST.

E. 44 ST.

PA

RK

AV

E.

12 A

VE

.

LINCOLN TUNNEL

0 0.2 Miles

`

$76GRAND

CENTRAL$75BRYANT PARK

$5634TH ST/PENN STATION

$54GARMENT DISTRICT

$67TIMES

SQUARE

$77HUDSONYARDS

AVERAGE STARTING OFFICE RENTS PER SF

GARMENT DISTRICT

+4% n = 2,500

HUDSON YARDS*

-1% n = 185

34TH ST/PENN

STATION

-5% n = 1,800

GRAND CENTRAL

+10% n = 5,900

BRYANT PARK

-2% n = 668

TIMES SQUARE

0% n = 1,300

% = change from Mar-18 to Mar-21

n = sample size

*Hudson Yards formally opened in

March 2019, but the first building

opened in May 2016

$40

$50

$60

$70

$80

$90

$100

Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21

Actual BID boundaries vary slightly from neighborhood boundaries shown. Source: CompStak, Inc.


AVERAGE STARTING OFFICE RENTS PER SF, MARCH 2021


9 A

VENUE

WEST 39 STREET

WEST 36 STREET

WEST 40 STREET

WEST 41 STREET

WEST 37 STREET

5 A

VENUE

8 A

VENUE

WEST 34 STREET

WEST 38 STREET

WEST 42 STREET

7 AVENUE

BROADWAY 6

AVENUE

0 0.1 Miles `

5th-6th Ave Side Streets



SixthAvenue

Broadway

Seventh Avenue

Eighth Avenue

318

369

168

119

768

561

266

Sample Size

$47.36

$44.68

$44.52

$66.43

$58.79

$53.55

$43.00

March 2019($/SF)

$47.89

$41.51

$46.74

$62.36

$59.52

$52.23

$43.16

March 2020($/SF)

$47.92

$36.48

$48.24

$56.65

$59.12

$51.50

$43.05

March 2021($/SF)

1%

-18%

8%

-15%

1%

-4%

0%

2-yr. Change

District Average

2,569 $52.57 $52.91 $53.86 2%

GARMENT DISTRICT AVERAGE STARTING OFFICE RENTS BY LOCATION

Source: CompStak, Inc., 12-month moving averages

OFFICE


Bao Bao Cafe at 214 W 39th St


RETAIL

KEY INSIGHTS

» A retail decline that pre-dated the pandemic continues. Garment District retail rents are down 15% over the past 5 years and down 33% in the past 3 years.

» Midtown neighborhoods experienced similar percentage declines in starting rents since COVID-19 hit, ranging from 11% to 14% drops.

» Times Square remains the most expensive retail area in Midtown, but starting rents have fallen 61% from their high in 2016 to become more comparable to neighboring areas.

» Some recent retail openings in the Garment District include:

» MOOYAH 485 Seventh Ave

» Yankee Doodle Dandy’s 558 Seventh Ave

» Tengri Tagh Uyghur Cuisine 144 W 37th St

» Stout NYC 104 W 40th St

» Kati Shop 104 W 37th St

GARMENT DISTRICT AVERAGE STARTING RETAIL RENTS PER SF


RETAILRETAIL

$234.48 $233.35

$228.69

$223.09

$216.53

$208.29

$199.50

$190.57

$181.19

$172.51

$165.04

$159.14 $155.72

$140

$150

$160

$170

$180

$190

$200

$210

$220

$230

$240

Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21


2 A

VE

.

3 A

VE

.

F D

R D

RIV

E

1 A

VE

.

AV

E.

MA

DIS

ON

AV

E.

W. 44 ST.

W. 52 ST.

W. 48 ST.

BR

OA

DW

AY

W. 30 ST.

LE

XIN

GT

ON

AV

E.

5 A

VE

.

E. 52 ST.

E. 46 ST.

E. 30 ST.

E. 34 ST.

W. 40 ST.

W. 50 ST.

E. 32 ST.

E. 48 ST.

W. 54 ST. E. 54 ST.

E. 40 ST.

AV

E.

E. 42 ST.

AV

E.

E. 50 ST.

W. 34 ST.

W. 42 ST.

W. 46 ST.

E. 44 ST.

PA

RK

AV

E.

12 A

VE

.

LINCOLN TUNNEL

0 0.2 Miles

`

$169GRAND

CENTRALN/A*BRYANT PARK

$18034TH ST/PENN STATION

$156GARMENT DISTRICT

$195TIMES

SQUARE

N/A*HUDSONYARDS

AVERAGE STARTING RETAIL RENTS PER SF, MARCH 2021

AVERAGE STARTING RETAIL RENTS PER SF

GARMENT DISTRICT

-34% n = 264

TIMES SQUARE

-51% n = 327

GRAND CENTRAL

-28% n = 519

% = change from Mar-18 to Mar-21

n = sample size

34TH ST/ PENN

STATION

-31% n = 247

$100

$150

$200

$250

$300

$350

$400

$450

Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21


Actual BID boundaries vary slightly from neighborhood boundaries shown. Source: CompStak, Inc.

*Sample sizes in Hudson Yards and Bryant Park were too small to be analyzed


RETAIL VACANCIESRETAIL VACANCIES

17. 1441 BROADWAY700 - 5,000 SFJLL

18. 1450 BROADWAY700 SFJLL

19. 488 SEVENTH AVE300 - 1,500 SFABH REALTY CORP

20. 500 SEVENTH AVE1,221 - 2,650 SFCUSHMAN & WAKEFIELD

21. 501 SEVENTH AVE1,849 - 3,162 SFEMPIRE STATE REALTY TRUST

22. 525 SEVENTH AVE2,250 - 8,271 SFJLL

23. 526 SEVENTH AVE220 SFNEWMARK KNIGHT FRANK

24. 535 EIGHTH AVE2,100 SFOLMSTEAD PROPERTIES

25. 545 EIGHTH AVE663 - 2,651 SFCUSHMAN & WAKEFIELD

26. 584 EIGHTH AVE1,400 SFISA REALTY GROUP

27. 601 EIGHTH AVE2,733 - 8,062 SFASHKENAZY ACQUISITION CORP

28. 610 EIGHTH AVE1800 SFMERIDIAN CAPITAL GROUP

29. 612-616 EIGHTH AVE1,250 SFCOMPASS

30. PORT AUTHORITY BUS TERMINAL196 - 4,400 SFJRT REALTY GROUP

31. 29 W 35TH ST3,900 - 8,200 SFUNITED GROUP

32. 41 W 35TH ST1,440 SFPD PROPERTIES

33. 213 W 35TH ST3,900 SFNOMAD GROUP

34. 223-225 W 35TH ST2,000 SFREDWOOD PROPERTY GROUP

35. 224 W 35TH ST1,100 - 3,000 SFAVENUE REALTY ADVISORS

36. 240 W 35TH ST2356 SFATCO BROKERAGE SERVICES

37. 253 W 35TH ST800 - 2,700 SFADAMS & COMPANY

38. 261 W 35TH ST4,000 SFH. JUSTIN REALTY SERVICES

39. 315 W 35TH ST3,132 SFKASSIN SABBAGH REALTY

40. 11 W 36TH ST2,500 SFVENTURE CAPITAL PROPERTIES

41. 29 W 36TH ST4,000 - 5,500 SFMERIDIAN CAPITAL GROUP

42. 142-148 W 36TH ST2,298 SFCUSHMAN & WAKEFIELD

43. 149 W 36TH ST1,600 - 3,200 SFNEWMARK KNIGHT FRANK

44. 152 W 36TH ST1,365 SFFALCON PROPERTIES

45. 229 W 36TH ST5,183 - 20,132 SFR.E. PERRY COMPANY

46. 256-258 W 36TH ST3,000 SFLEE & ASSOCIATES

47. 308-312 W 36TH ST5,500 SFNET MANAGEMENT

48. 347 W 36TH ST750 SFRESOLUTION REAL ESTATE PARTNERS

49. 20 W 37TH ST850 - 5,800 SFCBRE


51. 40 W 37TH ST2,100 SFPARK RIDGE INTERNATIONAL

52. 44 W 37TH ST1,000 - 2,450 SFWINICK REALTY GROUP

53. 148 W 37TH ST2,500 SFADAMS & COMPANY

54. 323-325 W 37TH ST1,000 - 4,900 SFKASSIN SABBAGH REALTY

55. 8 W 38TH ST2,700 SFABS PARTNERS REAL ESTATE

56. 18 W 38TH ST1,322 SFTHE HELLER ORGANIZATION

57. 39-41 W 38TH ST1,500 SFMJ PROPERTY GROUP

58. 48 W 38TH ST3,862 SFCBRE

59. 57 W 38TH ST1,000 -4,000 SFRESOLUTION REAL ESTATE PARTNERS



62. 230 W 38TH ST3,050 SFOLMSTEAD PROPERTIES

63. 252 W 38TH ST3690 SFTAMAR EQUITIES CORP.

64. 273 W 38TH ST1,250 SFISA REALTY GROUP

1. 980-990 SIXTH AVE525 - 1,687 SFCUSHMAN & WAKEFIELD

2. 989 SIXTH AVE4,500 SFWINICK REALTY GROUP

3. 1001 SIXTH AVE354 - 5,268 SFABS PARTNERS REAL ESTATE

4. 1008 SIXTH AVE1,000 SFJTRE

5. 1015 SIXTH AVE1,400 SFMETROPOLITAN PROPERTY GROUP

6. 1021-1039 SIXTH AVE1,875 - 4,432 SFNEWMARK KNIGHT FRANK

7. 1359 BROADWAY800 - 1,187 SFEMPIRE STATE REALTY TRUST

8. 1369 BROADWAY630 SFKASSIN SABBAGH REALTY

9. 1372 BROADWAY571 - 2,532 SFJLL

10. 1384 BROADWAY866 SFWINICK REALTY GROUP

11. 1400 BROADWAY700 - 3,691 SFEMPIRE STATE REALTY TRUST

12. 1407 BROADWAY1,773 - 2,921 SFJLL

13. 1410 BROADWAY1,052 SFJLL

14. 1420 BROADWAY2,400 SFKASSIN SABBAGH REALTY

15. 1435 BROADWAY1,100 - 3,500 SFSOLIL MANAGEMENT CORPORATION

16. 1440 BROADWAY1,745 - 16,156 SFCUSHMAN & WAKEFIELD

RETAIL VACANCIES


`

65. 325 W 38TH ST810 SFFALCON PROPERTIES

66. 21-23 W 39TH ST2,600 SFFOREST PARK PROPERTIES

67. 37 W 39TH ST1,750 - 3,000 SFRESOLUTION REAL ESTATE PARTNERS

68. 55 W 39TH ST4,500 SFSINOVSKY REALTY SERVICES

69. 214 W 39TH ST2,350 - 4,700 SFGRANITE MANAGEMENT

70. 231-250 W 39TH ST1,100 -1,444 SFADAMS & COMPANY

71. 234 W 39TH ST3,479 SFCUSHMAN & WAKEFIELD

72. 260 W 39TH ST2,800 SFLEE & ASSOCIATES

73. 270-276 W 39TH ST500 SFLEE & ASSOCIATES

74. 147 W 40TH ST1,975 - 2,100 SFCOMPASS

75. 218-232 W 40TH ST5,192 - 10,316 SFSAVITT PARTNERS


77. 264 W 40TH ST1,000 - 3,400 SFNEWMARK KNIGHT FRANK

78. 334-340 W 40TH ST2,000 - 4,000 SFKASSIN SABBAGH REALTY

79. 114 W 41ST ST744 - 2,546 SFCUSHMAN & WAKEFIELD

12

3 4

5

6

7

8

9

10

1112

13

14

15 16

17 18

19

20 21

2223

24

25

26

2728

29

30

31323334

3536

373839

4041

42

43

44

45

4647

48

4950515253

54

5556

57

58

5960

616263

6465

666768

69

70

717273

74

75767778

79

Source: CoStar


RESIDENTIAL

KEY INSIGHTS

HOTELS

» There are currently 48 hotels in the Garment District with 11,000 rooms.

» At least 15 hotels in the neighborhood closed temporarily and at least one (Courtyard by Marriott at 71 W 35th St) has closed permanently.

» At least three hotels (Margaritaville Resort, The Draper, and Arlo Hotel Midtown) are anticipated to open in 2021.

» Eight additional hotels were planned or under construction before the pandemic, but their status is unclear.

» Average revenue per available room (RevPAR) for Garment District area hotels is down 74% from March 2019.

» 1.2 million guests stayed in Garment District hotels in the past year, down from 2.7 million over the same time period in 2018-19, a decline of 56%.

» Hotel revenue in the Garment District was down $542 million over the past year, declining 82% from 2018-19.

» Performance is rebounding faster at hotels outside of business districts (Uptown and Village/SoHo/Tribeca).

HOTEL DEVELOPMENTHOTEL DEVELOPMENTHOTELS

Margaritaville Resort under construction at 560 Seventh Avenue


REVPAR, OCCUPANCY, & ADR COMPARISON, MARCH 2020 & 2021

Uptown

Village/SoHo/Tribeca

Financial District

Midtown East

Midtown South*

Midtown West/Times Square*

Garment District

Mar 2021 Mar 2020 Mar 2021 Mar 2020

Revenue Per Available Room (RevPAR)

Occupancy

$47 $53

$50 $61

$50 $53

$55 $57

$56 $59

$67 $63

$103 $86

48.1% 35.2%

35.8% 31.1%

45.3% 33.6%

37.7% 26.6%

43.2% 28.8%

48.0% 29.0%

45.6% 31.4%

*Garment District data is included in this area

Mar 2021 Mar 2020

Average Daily Rate (ADR)

$97 $151

$139 $197

$110 $159

$147 $214

$129 $205

$139 $218

$225 $273

Pct. Change

-11.3%

-18.0%

-5.7%

-3.5%

-5.1%

+6.3%

+19.8%

OCCUPANCY & AVERAGE DAILY RATE IN GARMENT DISTRICT, 2020-2021

Source: STR

35.2

38.3

43.8

33.8 34.435.4

34.0

37.9

33.4

38.636.7

40.6

48.1

151

102 103107

102 105 107 105 103 103

9599 97

0

20

40

60

80

100

120

140

160

25

30

35

40

45

50

2021

Occupancy (%) ADR ($)

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Source: STR


PEDESTRIANS

TOTAL WEEKLY PEDESTRIAN VOLUMES, 2019 - 2021

Source: Springboard

PEDESTRIANSPEDESTRIAN COUNTS

January 2021

March 2021

July 2020

November 2020

September 2020

5.3 million

7.7 million

5.2 million

5.9 million

7.7 million

Change from 2019Change from 2020

-11%

-63%

N/A

N/A

N/A

-61%

-61%

-62%

-66%

-72%

Total Count

May 2020 2.3 million N/A -87%

March 2020 8.7 million N/A -56%

Source: Springboard

MONTHLY PEDESTRIAN VOLUMES SINCE MARCH 2020

KEY INSIGHTS

» Warmer weather and the vaccine rollout spurred higher pedestrian counts each week in March, with the last week of the month setting a new post-pandemic high.

» MTA weekday subway ridership is currently at roughly 35% of pre-pandemic totals. The Long Island Rail Road is at 30% and Metro-North Railroad at 25%.


WEIGHTED WEEKDAY AVERAGE PEDESTRIAN COUNTS, JAN - MAR 2021

40th St

39th St

38th St

37th St

36th St

35th St6th

Ave

7th

Ave

Broadway

8th

Ave

PortAuthority

BusTerminal

BryantPark

Pla

zas

SIXTH AVE at 39th St

18,688

SEVENTH AVE at 40th St

20,071

BROADWAY at 40th St

21,794

EIGHTH AVE at 36th St

32,602

SEVENTH AVE at 37th St

23,296

`

BROADWAY at 37th St

17,553

Source: Springboard

We are the Garment District Alliance

We serve New York’s storied Garment District, in the heart of Midtown Manhattan. Working

in partnership with local building owners and businesses, we improve the quality of life

and economic vitality in this authentic New York neighborhood. The Garment District Alliance

is a not-for-profit corporation, established in 1993.

For more information on all that’s happening in the Garment District, visit garmentdistrict.nyc

Cover: Kim Carlino installing “Spectrum” on Seventh AvenueBack: “Pin Cushion” by Floratorium on Seventh AvenuePhotos by Alexandre Ayer/Diversity Pictures

Published May 2021

The Garment District Alliance

209 West 38th Street, 2nd Floor

New York, NY 10018

Tel. 212.764.9600 | Fax 212.764.9697

[email protected]

www.garmentdistrict.nyc

#GarmentDistrict

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Economic Quarterly Report - garmentdistrict.nyc